Palm oil falls on Indonesia export levy uncertainty, US tariff threats

KUALA LUMPUR: Malaysian palm oil futures fell on Friday as trading resumed after a two-day Lunar New Year holiday, with uncertainty over Indonesia’s export rates and US tariff threats weighing on the market.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange slid 19 ringgit, or 0.44%, to 4,260 ringgit ($963.36) a metric ton by the midday break.

The contract has gained 1% so far this week after logging a 0.62% rise last week.

The possibility of a 9% to 10% reduction in Indonesian crude palm oil export levies and US President Donald Trump’s threat of tariffs on Canada and Mexico have caused market uncertainty, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

Palm closes higher despite weak demand, Indonesia export rate uncertainty

China holiday and weaker Malaysian palm oil exports, coupled with a production recovery last month, provided further concerns, said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin group. The market is now awaiting Malaysian palm oil export and production data for January, Bagani said.

Cargo surveyors are expected to release Malaysian palm oil export estimates for January later in the day. Oil prices rose as markets weighed Trump’s threat of tariffs on Mexico and Canada that could take effect this weekend.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

Soyoil prices on the Chicago Board of Trade were up 1.22%.

The Dalian Commodity Exchange is closed from Jan. 28 to Feb. 4 for the Lunar New Year holidays.

Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

The ringgit, palm’s currency of trade, weakened 0.77% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Palm oil may test resistance at 4,315 ringgit per metric ton, a break above which could open the way towards 4,364 ringgit to 4,425 ringgit range, Reuters technical analyst Wang Tao said.